Dilemma

FEATURED ARTICLES ABOUT DILEMMA - PAGE 5

Corporate might be one movie that has won appreciation from the likes of IIM-Ahmedabad's director Bakul Dholakia but many sections of India Inc are upset about presentation of corporate houses as 'ruthless' organisations focusing only on profits and the bottom line. Assocham has drawn first blood by criticising the film, saying that it projects corporates in bad taste. Interestingly, the industry association has pointed out that the film industry itself is getting corporatised gradually!

The proposal to provide the poor with smart cards carrying food subsidy redeemable at fair price shops that sell grain at unsubsidised prices seems an improvement on food coupons vulnerable to counterfeiting. However, it glosses over a dilemma. If public distribution system (PDS) beneficiaries have to necessarily buy their food from PDS outlets, grain handling ? procurement, storage and transportation ? would remain predominantly a public sector preserve and retain the theft, wastage, leakages and high administrative costs that mar the PDS. The bloated food subsidy bill would not come down, for the same level of coverage.

The foreign exchange reserves held by the Reserve Bank of India have crossed the $60-billion mark. They are now sufficient to cover 10 months worth of imports of goods and services. Since we have almost never accumulated reserves of this magnitude, they raise some important questions. What led to this accumulation? Is it desirable? If yes, why and how much more reserves must we accumulate? If not, why not and what is the best way to arrest the process? Answers to these questions are technical but can be understood provided one is willing to work through some mundane balance-of-payments statistics.

Supporting development and growth of the financial system at the same time as ensuring its smooth functioning is the role that all national financial regulators are required to play. The usually conflicting tensions between liberal rule-making and forbearance on the one hand and cautious restraint on the imprudent behaviour of mavericks on the other, is a dilemma that regulators must live with. By and large, regulators are a conservative lot and tend to favour caution over liberal growth.

which is the best avenue for parking your surplus funds? it's the million dollar question, especially with stock markets in the doldrum over the past several months: which is the best avenue for parking your surplus funds? as always, the leading contenders for your savings remain real estate, bullion, stocks and debt instruments. so, which is the hot pick? for starters, financial advisors caution that the small investor must keep two things in mind before taking an investment decision - the risk-return factor and the timeframe.

The vice-chairman of a leading American insurance company steps out of a Mercedes Benz parked outside the CPM headquarters. He walks into the office and 20 minutes later, returns disappointed. The Marxists will not change their mind on allowing more FDI in insurance. This is not an unfamiliar scene at AKG Bhavan these days, where, apart from additional security personnel and an air of bonhomie, little else has changed. But the story of the Left after it began its tango, or more appropriately a tandav, with the Manmohan Singh government two years ago is different.

Indian communist parties have set the ball rolling for the formation of a non-Congress and non-BJP bloc of parties and groups with a view to form a coalition government at the Centre. Mr Prakash Karat met Mr Mulayam Singh Yadav of the Samajvadi Party at Lucknow on June 17 and observed that "the option of the Third Front is still open. Discussions are continuing with like-minded political parties over the formation of the Front to launch struggles against anti-people policies of the Congress-led UPA government.

We talk these days about India's favourable demographics. We are one of the few countries in the world where the dependency ratio will improve in the coming years. There are 570 million people in India under the age of 25. When most of the developed world is beset with the problem of ageing, we have a uniquely young population. However, whether this is an advantage or not depends on our ability to have a productive population. If we have a large group of young uneducated people without the ability to participate in the workforce, what we will have is a demographic disaster.

It is quite significant that the report by Tarapore Committee II on India moving to fuller capital account convertibility comes in the midst of a debate within the government on whether the fiscal responsibility legislation should be given another pause. Mind you, fiscal consolidation remains a key pre-requisite for moving to fuller convertibility from 2007 onwards, as outlined in the new report. Planning Commission deputy chairman Montek S Ahluwalia has argued that meeting FRBM (fiscal responsibility and budget management)

The Reserve Bank of India's first quarter review of its Annual Monetary Policy last Tuesday is an outstanding example of the dilemmas faced by a central bank trying to frame a coherent monetary policy in a policy environment overwhelmingly dominated by the fisc. This is something successive governors of the RBI have agonised over. But the bank's lack of independence coupled with government's gargantuan appetite for funds has ensured that there's not much they can do about it. Monetary policy plays second fiddle to fiscal policy.